Investment advisers have a great many reasons to feel anxious and not just because of the stock market's volatility. Registered investment advisers and investment adviser representatives face the risk of cyber attacks against their firms and their clients. If those risks weren't enough to cause advisers to be insecure, they also must be concerned that securities regulators will criticize their efforts to address cyber threats.
Both the Securities and Exchange Commission and state securities regulators assess RIAs' cybersecurity preparedness during compliance examinations. If examiners are disappointed with an RIA's cybersecurity efforts, the examination is likely to have an unhappy outcome.
In a June 25 speech, SEC Commissioner Luis Aguilar said, “Designating an information security officer and carrying cyber insurance are both commonsense precautions that have been shown to decrease the costs associated with data breaches, and it's disappointing so many firms fall short in these important areas.” MORE